Foreign HRC Price Appeal Dwindles as Domestic Prices Fall

The appeal to purchase foreign hot-rolled coil (HRC) further faded this week, with foreign prices now in close quarters to domestic steel, according to Steel Market Update’s latest analysis. Since mid-May, US steel prices have generally declined at a faster rate than foreign prices, meaning the potential discount on imported products has been shrinking for the past two and a half months. This week, foreign prices were up a few bucks, while domestic prices dropped, reducing any remaining import competitiveness. After taking freight costs, trader margins and tariffs into consideration, foreign imports for one region are more expensive than domestic steel for the second consecutive week, and the other two regions hold a 2–3% potential discount over domestic prices (down from discounts of 12–26% seen in May).

The following calculation is used by SMU to identify the theoretical spread between foreign hot-rolled coil (HRC) prices (delivered to US ports) and domestic HRC prices (FOB domestic mills). This is only a “theoretical” calculation because freight costs, trader margins, and other costs can fluctuate, ultimately influencing the true market spread. This compares the SMU US HRC weekly index to the CRU HRC weekly indices for Germany, Italy and Far East Asian ports.